Question

The Thomlin Company forecasts that total overhead for the current year will be $11,358,000 with 173,000 total machine hours. Year to date, the actual overhead is $7,548,000 and the actual machine hours are 90,000 hours. The predetermined overhead rate based on machine hours is:___________

a. $84 per machine hour
b. $44 per machine hour
c. $126 per machine hour
d. $66 per machine hour

Answer 1

d. $66 per machine hour

Step-by-step explanation:

Predetermined overhead rate = Budgeted Overheads ÷ Budgeted Activity

therefore,

Predetermined overhead rate = $11,358,000 ÷ 173,000 machine hours

= $65.653 or $66.00

Conclusion

The predetermined overhead rate based on machine hours is: $66 per machine hour.